BNP Paribas Mutual Fund on Friday said it liked consumer companies with a strong franchise and consumer ownership as they will indefinitely bounce back in terms of growth rate.

In an interview to CNBC-TV18’s Anuj Singhal and Surabhi Upadhyay, Anand Shah, deputy chief executive officer and head-investments, said, “While the Nifty is looking up, we have been seen correction in the midcap and the smallcap segment. So, overall the mood of the market has sort of changed and we are very clearly seeing that given the macro uncertainty that exists locally and globally, people are little more cautious than they were in calendar year 2017. I think this is a similar mood except that the name of the stocks sort of changed and every recent sharp rupee depreciation has just added little more in terms of volatility.”

“There are three aspects to this. One is obviously, if you have an asset–liability mismatch (ALM), which means they actually have borrowed short and lend long. Obviously, it will have an impact on the margin and on the valuations also. Secondly, have you been sort of growing too rapidly and a rising interest rates can lead to sort of a more default of a cycle and would you have more non-performing asset (NPA), so that is another question you may ask. Third is at what valuation the non-banking finance companies (NBFC) has been trading and what sort of growth is priced in. Because at the higher interest rates, you will also see some slowdown in the retail loans where the growth has been very stupendous,” Shah said.

 

Source-